Compromise sought on stalled energy legislation

Republicans resist oil industry taxes, utilities mandate

WASHINGTON - Senate Democrats searched for a compromise on energy legislation as Republican leaders made clear yesterday that they will oppose oil industry taxes and a mandate for utilities to use more wind and solar-generated electricity.

The sharp divisions within the Senate over the taxes and renewable fuels mandate surfaced when Democrats fell seven short on a procedural vote. The 53-to-42 vote came as the Senate began considering an energy package approved by the House on Thursday.

"I would hope this sends a signal," said Senator Pete Domenici, Republican of New Mexico after the test vote.

Majority leader Harry Reid of Nevada acknowledged the House-passed bill will require some surgery and he said he planned to return to the legislation next week. Whatever changes are made would then have to be approved by the House.

Much of the legislation, including the first increase in automobile fuel economy requirements in 32 years, has "near universal support," said Senate Republican leader Mitch McConnell of Kentucky.

But he said the House-passed bill "won't become law" unless the "twin millstones of utility rate hikes and massive tax increases" are removed. Democrats acknowledged they don't have the 60 votes needed to overcome a GOP filibuster with the bill as it stands.

Republican lawmakers, as well as the White House, have been most critical of $13.5 billion in taxes imposed on the five largest oil companies under the House-passed bill. It's part of a broader $21 billion tax package that senators are trying to rework.

Finance Committee Chairman Max Baucus, a Montana Democrat, said yesterday that while "some modest changes" could be made in the tax provisions, the taxes are "an essential, necessary component" because they pay for a wide range of clean energy programs, from capturing carbon dioxide from power plants to extending short-term tax credits for solar and wind energy plants and commercial development of cellulosic ethanol.

While more than half the states already have renewable energy standards for power producers, opponents of a national mandate maintain it would push up electricity prices in regions such as the Southeast where wind or solar energy may not be feasible. Domenici has said the House decision to include the requirement on utilities has made the bill "untenable for many in the Senate."

Senator Jeff Bingaman, a New Mexico Democrat, chairman of the Energy and Natural Resources Committee, and a supporter of the renewable fuels electricity mandate, said he wanted to talk to Domenici "to see if there's a way to get this in a form that we can pass."

A concern to some senators is that the widely supported increase in automobile fuel economy to 35 miles per gallon by 2020 - a centerpiece of the House-passed bill - could fall victim to the disputes over taxes and the mandates to the electricity industry. "I don't think anybody wants to lose it," said Senator Dianne Feinstein, Democrat of California and one of the architects of the auto fuel economy language, which originated earlier this year in the Senate.